The Bangladesh Securities and Exchange Commission (BSEC) has asked Sonali, Rupali, Janata and Agrani banks to increase their shareholdings.
The BSEC on Tuesday sent letters to the managing directors of the four public banks asking them to take the necessary steps to make new investments in their respective portfolios.
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He also asked to provide information on the investments of the banks’ own portfolios as of April 18, 2022 as soon as possible.
“Institutional investors are expected to dominate trading activities instead of retail ones to improve the stability of the country’s capital market,” he said.
However, the investor base in Bangladesh’s capital market is mainly dominated by retail investors, who make up about 80 percent of total investors, the BSEC said.
The BSEC also asked securities traders to increase investments in the stock market.
Securities dealers are big investors who take advantage of BSEC licenses to trade stocks for themselves, unlike brokers who trade stocks for others.
Dealerships differ from individual investors in that their licenses come with prerequisites such as a minimum investment requirement, but have other benefits such as IPO quota reservation.
Banks can invest funds by taking loans from Bangladesh Bank as it has allowed banks to set up a special fund of Tk 200 crore for this purpose which will not be incorporated into their capital market exposure limit , he added.
The Banking Companies Act 1991, amended in 2013, allows a bank to be exposed to the stock market up to 25% of its capital, which includes paid-up capital, share premium, legal reserve and profits not distributed.
On February 10, the banking regulator rolled out the package which allows banks to set up a Tk 200 crore fund by withdrawing it from Bangladesh Bank through a repurchase agreement against treasury bills and bonds that they own.
Banks will have to pay 5% interest for the fund and the term of the loan will be until February 2025.
The DSEX, the benchmark index of the Dhaka Stock Exchange, rose 55 points, or 0.89%, to 6,662 points yesterday.